All across United States, cash-strapped plaintiffs are making a beeline for obtaining loans against anticipated favorable settlements so that they can tide over the intervening financially-difficult times. However, since by and large the sector is self-regulated and there is not much of exposure in the mass media, there is a whole lot of misinformation in the minds of the public leaving room for manipulation by unethical lawyers and funding companies of their unsuspecting clients. While it is true that loans against pending lawsuit settlements can come in handy for those who have exhausted all their financial options and are left with no other course of action open but to drop their litigation, there is a lot to be known and understood about the nature and process of these pending settlement loans. The key to getting a good and fair deal is to know the pros and cons before applying for the loan.
Fact: Lawsuit Funding Firms Are Not Transparent About the Actual Cost of the Loan
After ensuring that you have explained all the facts of the lawsuit to the financing company, you should ask very directly what their costs are. Request all the applicable ones to be listed along with the rates of interest and the amounts. If the funding company is a shady one it will try to go around in circles without giving you concrete replies. Make it a point not to deal with company representatives who do not give your clear and direct answers and seem to be always beating around the bush or qualifying their answers with a lot of terms and conditions.
Fact: Involving Brokers Makes the Process Slow and Expensive
It is best to let your attorney know of your intention to apply for a pre-settlement loan because in any case the lawsuit funding firm will establish contact with him even before they approve of the loan to you to establish the facts of the case. It is best to ask for a recommendation from your lawyer about the financier or even locate one by yourself without involving a broker. Typically, a broker does not add any value to the process and will cost anything between 15-25% of your funded amount. What is worse, as they are interested in closing a deal quickly they will send your case details to a number of lawsuit loan firms who will then all try to get in touch with your lawyer and you will in all probability end up with a very disturbed and irritated attorney.
Fact: Your Lawyers Will Cooperate More If You Give Them Advance Intimation
It is best that you let your attorney know that you are going to apply for lawsuit finance even before you have made any contact with the funding firms. Armed with this information, your attorney will be able to prepare a case dossier containing all the relevant documents that will be called for by the funding firm for examination. Remember, for a successful loan application the funding company and the lawyer firm must be comfortable and cooperate with each other so that your disbursement can be made faster.
Fact: Funding Firms Are Only As Fast As Your Lawyer
Yes, it is true that without the case documents being made available by your attorney, the funding firm is not in a position to evaluate if your case has nay merits that would make it eligible for funding. Hence, it is wise to get a complete set of pertinent documents from your lawyer before approaching a financier. This exercise will also help your attorney to be more prepared for document requests from funding companies. It is best that you familiarize yourself with the all the fact of your case so that you can answer all the questions of the financing firm and they will have to seek less information from your lawyer.
Fact: You Will Only Qualify for 10-20% of the Expected Settlement Value
This is absolutely true and you should make it a point to consult your attorney regarding the anticipated value of the settlement so that you are spared of a nasty surprise in case you were expecting a higher disbursement. The funding is apparently so low as the payment to the funding firm can only be made after the lawyer’s fees and medical liens have been settled. Generally, this leaves about a third of the settlement in the hands of the customer from which the funding company will take its cut.
Author bio: Maxwell Collins is a successful personal injury lawyer who has worked with a number of lawsuit loan firms on behalf of his clients.
